This paper investigates the determinants of business cycle synchronization across regions, using both international and intranational data. The study evaluates the linkages between trade in goods and financial assets, specialization, and business cycle synchronization using a system of simultaneous equations. Key findings include: 1. **Simultaneity**: Both trade and financial openness have direct and indirect effects on cycle synchronization. 2. **Financial Integration**: Regions with strong financial links are significantly more synchronized but also more specialized. 3. **Specialization**: Specialization patterns have a significant impact on business cycles, beyond their reflection of intra-industry trade and openness to goods and assets trade. 4. **Trade and Cycles**: The estimated role of trade aligns with existing models when intra-industry trade is controlled for. The paper also discusses the robustness of these findings to alternative specifications and methods, including GMM estimates, different measures of trade, and the Hodrick-Prescott filter. The results suggest that theories of international business cycles should incorporate sectoral heterogeneity, trade within and between industries, and "herding" in international capital flows. The findings are consistent across countries and U.S. states, indicating that financial integration and specialization patterns are important factors in synchronizing business cycles.This paper investigates the determinants of business cycle synchronization across regions, using both international and intranational data. The study evaluates the linkages between trade in goods and financial assets, specialization, and business cycle synchronization using a system of simultaneous equations. Key findings include: 1. **Simultaneity**: Both trade and financial openness have direct and indirect effects on cycle synchronization. 2. **Financial Integration**: Regions with strong financial links are significantly more synchronized but also more specialized. 3. **Specialization**: Specialization patterns have a significant impact on business cycles, beyond their reflection of intra-industry trade and openness to goods and assets trade. 4. **Trade and Cycles**: The estimated role of trade aligns with existing models when intra-industry trade is controlled for. The paper also discusses the robustness of these findings to alternative specifications and methods, including GMM estimates, different measures of trade, and the Hodrick-Prescott filter. The results suggest that theories of international business cycles should incorporate sectoral heterogeneity, trade within and between industries, and "herding" in international capital flows. The findings are consistent across countries and U.S. states, indicating that financial integration and specialization patterns are important factors in synchronizing business cycles.